APPENDIX 7

Motor Vehicle Competitions

A. General

This Appendix provides joint guidance by OMB and The General
Services Administration (GSA) for use in cost comparisons involving
the provision of motor vehicle fleet management services. It apples to
conversions to or from in-house, contract or interservice support
agreement (ISSA). Agencies should consider the costs, benefits and
feasibility of using the agency's fleet management system, the GSA
Interagency Fleet Management System (IFMS), other ISSA providers and
qualified commercial management providers.

B. Specific

1. Cost comparisons will comply with Part I and Part II of this
Supplement, and as discussed in this Appendix.

2. Cost comparisons should distinguish between the benefits of
centralized Government vehicle acquisition and the potential benefits
of fleet acquisition, operation, maintenance, and disposal management
support services. Solicitations should permit or may require offerors
to compete vehicle asset costs separately from fleet management
services.

3. In accordance with Part I, Chapter 2 of this Supplement, all
Government offerors will certify that their performance cost estimates
or reimbursable rates are calculated in accordance with this
Supplement.

4. Agencies may include all of their fleet requirements,
including those currently being met by the GSA/IFMS or the private
sector. Vehicles currently provided by the GSA/IFMS may be included in
the agency's in-house cost estimate as IFMS vehicles.

1. The requesting agency's in-house costs are calculated as
provided in Parts I and II of this Supplement and entered on Lines 1
through 7 as appropriate. Care should be taken to separate vehicle
asset costs (cost of vehicles) from vehicle acquisition and other
administrative management support costs.

D. Developing comparable motor vehicle fleet costs

1. Competitions between a requesting agency, private sector
offeror, the GSA/IFMS or another ISSA offeror may require that the
requesting agency make certain adjustments in scope and cost to ensure
that the cost comparison is equitable. These scope and cost
adjustments, as discussed below, include:

--Contract Price

--Contract Administration Costs

--Additional Costs

--One-time Conversion Costs

--Gain/Loss on Disposal/Transfer of Assets

--Federal Income Taxes

--Other Adjustment Costs

--Minimum Differential

2. Contract Price (Line 9 and Line 16).--The contract price is
the price proposed by the lowest priced, fully qualified commercial
offeror, IFMS or ISSA offeror. This will be obtained by issuing a
solicitation requesting offers. The agency should be careful that the
solicitation accurately describes its fleet management needs.

3. Contract administration costs (Line 10 and Line 17).

Include costs, as appropriate from Part II Table 3-1.

4. One-time conversion costs (Line 11 and Line 18).

a. One-time conversion costs may result when a contractor, IFMS
or ISSA offeror takes over the operation of the fleet. This can
involve the costs of the transfer of Government-owned supplies or
temporary labor costs incurred to facilitate the transition to a new
fleet manager.

b. When items of material become available for transfer to the
contractor, IFMS or ISSA, material related conversion costs may
result. If materials consumed as a part of the requesting agency's MEO
are clearly identified in the PWS to be transferred to the contractor,
IFMS or ISSA, the value of those materials and supplies are common
costs and not considered a part of the comparison.

c. If, however, those same materials are not to be provided to
the contractor, IFMS or ISSA offeror, but are instead to be
transferred to another agency location or excessed, the value of that
material should be subtracted from the contract, IFMS or ISSA offers
as a net savings to the Government resulting from the conversion.

5. Gain on disposal of assets (Line 12 and Line 19).

a. If an agency requires the contractor, IFMS or ISSA to replace
existing Government (agency) owned vehicles (assets) by a specific
date, the projected fair market value of those existing assets, as
established by generally available industry guides, are subtracted
from the contractor's, IFMS or ISSA's cost estimates. These values
represent a net "savings" caused by conversion.

b. Agencies may provide that vehicle replacement by the
contractor, IFMS or ISSA offeror will be in accordance with the
Government's existing or MEO replacement schedule. In this case, all
parties to the competition should assume replacement at the same rate.
Values from existing fleet to the Government apply to all alternatives
equally.

c. Agencies may also continue to provide vehicles for contractor,
IFMS or ISSA fleet management. No adjustments are necessary.

d. Finally, agencies may require replacement by the contractor,
IFMS or ISSA offeror and may allow the IFMS or ISSA offeror to simply
assume ownership of the existing fleet as Federal agencies. In this
case, the agency, IFMS or ISSA offeror receives a gain--and a
considerable competitive advantage over the contract bid--estimated at
the fair market value of the existing fleet. An amount equal to the
fair market value of the existing fleet is added to the agency, IFMS
or ISSA offeror bid at Line 19 for cost comparison purposes.

6. Federal income tax (Line 13 and Line 20).

a. Agencies should recognize the current contract support
identified in Line 6, above. Calculate the total Federal Income Tax,
based upon the contractor's offer (Line 9) and Appendix 5, Tax Rate
Table. Subtract from the contractor's estimated tax liability the
Federal taxes paid within the in- house cost estimate (estimated from
the appropriate share of Line 6 and as described in the Management
Plan) and enter the remainder.

b. The same treatment may be afforded to the GSA/IFMS or ISSA
offer, if the offeror certifies the value of its contract support
contained within its overall cost estimate. This estimate must be
available to the requesting agency's Independent Review Officer for
review and concurrence.

7. Conversion differential (Line 7, Line 14 and Line 21).

The standard minimum differential, as provided in Part II of this
Supplement, shall be applied to the contract, IFMS and ISSA offers. If
the cost comparison is being conducted to determine if motor vehicle
fleet management services should be converted from contract, IFMS or
ISSA performance to in-house agency operation, the conversion
differential is added (on Line 7) to the in-house performance cost
estimate. If the cost comparison is being conducted to determine if
motor vehicle fleet management services should be converted from
in-house operation to contract, IFMS or ISSA performance, the
conversion differential is added (on Line 14 and Line 21) to the
contract, IFMS or ISSA performance cost estimates.

8. Other IFMS/ISSA Scope Adjustments (Line 22).

a. It is not the intent of this Supplement to require the IFMS or
other potential ISSA offerors to alter their methods of operation to
provide unique or site specific services. While such services may meet
agency missions and may legitimately be included in the solicitation,
additional adjustments to the IFMS/ISSA cost estimate may be necessary
to reflect differences in the bids. Examples of such services include:
dispatching, vehicle transition, maintenance work warranties, certain
disposal services/costs, accessory installations and removals, tire
replacements, etc.

b. Agencies should identify the differences between the
requirements of the solicitation (contractor bid) and the IFMS/ISSA
cost estimate. The agency determines if any item or combination of
items will impact the agency's ability to perform. If the agency's
ability to perform would be adversely impacted, the IFMS/ISSA cost
estimates may be rejected as non-responsive. If the differences will
have minimal agency performance implications, and/or can continue to
be performed by agency personnel, the IFMS/ISSA cost estimates will be
adjusted for purposes of comparison with the contractor and MEO
offers, based upon the comparable costs contained in the agency's MEO.

c. A complete record of all adjustments to the contractor's, IFMS
and ISSA's cost estimates should be maintained and made available to
the public upon request.

E. Motor vehicle cost comparison

1. A Motor Vehicle Cost Comparison Form (MVCCF) has been
developed. Use of this form will help agencies move through the cost
comparison in a structured manner. The Form has been set up with five
sections. Each section relates to a different set of costs or to the
evaluation itself. Within each section, the appropriate cost elements
have been shown.

2. Each cost listed is projected for all periods of the cost
comparison. The first year will reflect current estimated costs. For
each of the following years, the inflation factors provided by this
Supplement shall be used for each element of cost that is affected by
inflation. A minimum of one year and three option years will be used
for comparative purposes.

3. With the completion of the MVCCF, the agency may evaluate the
alternatives. In order to do this, the total Lines (Lines 8, 15 and
23) should be entered on Lines 24, 25 and 26, respectively. The
decision is based upon the lowest overall cost to the Government over
the minimum five-year cost comparison period. Enter the decision as
appropriate.